Inheritance tax receipts reach fresh record high as Autumn Budget approaches

Inheritance tax collections in the UK soared to a record high in the three months leading up to September 2026, as soaring asset values and frozen tax thresholds ensnared more middle-class households. According to HMRC, receipts reached £4.7 billion during this period, marking a seven percent increase from the previous year when collections totaled £4.3 billion. September alone saw record monthly IHT receipts of £936 million, up from £671 million in 2025.

Samantha Warner, legal director at Winckworth Sherwood, warned that IHT remains an "unavoidable inheritance tax planning issue" that should not be disregarded. The Office for Budget Responsibility (OBR) predicts that receipts will soar to £9.5 billion by the end of the 2026/27 financial year, up from £8.5 billion in the prior year.

The rise in IHT collections is primarily attributed to Chancellor Rachel Reeves' decision to extend the freeze on income tax thresholds until 2031 in the previous Autumn Budget. Rising asset values, including property and investments, have also pulled more assets into the tax net, exposing more middle-class families to the tax. The nil-rate band has remained stagnant at £325,000 since 2009, while house prices have steadily climbed, particularly in the South East, where average prices hit £380,000 last month and London prices reached £554,000.

Financial experts warn that the impact of the tax is only set to intensify. Sarah Coles, head of personal finance at AJ Bell, expects the "pain to only begin" for middle-class families, with the introduction of pensions subject to IHT from April 2027 expected to add to the burden. This change is anticipated to drag 10,500 estates into the IHT net that year, hike tax paid by 38,500 estates, and increase the tax due by an average of £34,000 per estate.

Lee Quinn, chartered financial planner at Titan Wealth, noted that IHT is now in the spotlight as the Budget approaches, with families closely monitoring whether the Chancellor makes any further changes. Quinn cautioned that if the Budget introduces additional measures, families may need to reassess their retirement planning, gifting strategies, and wealth transfer plans.

Despite the OBR's forecast of a year-on-year increase in IHT receipts, some experts predict a potential slowdown. Tim Stovold, head of tax at Moore Kingston Smith, argues that the market cooling of stock prices and house values since February may lead to a decline in future IHT collections. However, financial advisors urge UK citizens to remain vigilant about their potential exposure to IHT, particularly before the changes take effect in April 2027.